BlogMasterMind, Testimonials and Seller Assisted Marketing Plans
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This is a post designed to show the interactions between a) an internet marketing program, b) the FTC new rule on testimonials, and c) a particular State business opportunity rule, in this case, the California "Seller Assisted Marketing Plans" Act.
Paul Schlegel, who writes a very useful blog, called WorkatHomeTruth, has wondered why nobody by me, apparently, is pointing out to affiliate marketers their legal liabilities under the US State's business opportunities acts.
Most of the affiliate marketers have also misunderstood the FTC's new rule on testimonials and the removal of the "safe harbor" for representations that are a) out of the ordinary, and b) for which there is no typical consumer information available. The new FTC rule, in effect says, no typical consumer information about, say, earnings potential, means that you cannot suggest any earnings potential.
I have chosen Yaro Starak's new website, BlogMasterMind, to make these two points in more detail.
Bear in mind that I have nothing pro or con to say about Yaro Starak's BlogMasterMind website. I am simply analyzing the content of the website for compliance.
What does the California Seller Assisted Marketing Plans Act require, if you are selling to California residents?
"The law, California Civil Code Section 1812.200 et seq., requires Seller Assisted Marketing Plans (SAMPs) to register with the Attorney General's Office, to provide significant disclosure statements to potential buyers prior to signing any contracts, and to provide the buyer specific contractual rights after a purchase has been made."
So, does Yaro have to register and provide a disclosure document? Well, let's review the elements of a SAMP.
Roughly, if you sell any product or services that costs between $500 and $50,000, and Yaro either:
- (1) Represented that the purchaser will earn, is likely to earn, or can earn an amount in excess of the initial payment paid by the purchaser for participation in the Seller Assisted Marketing Plan.
- (2) Represented that there is a market for the product, equipment, supplies, or services, or any product marketed by the user of the product, equipment, supplies, or services sold or leased or offered for sale or lease to the purchaser by the seller, or anything, be it tangible or intangible, made, produced, fabricated, grown, bred, modified, or developed by the purchaser using, in whole or in part, the product, supplies, equipment, or services which were sold or leased or offered for sale or lease to the purchaser by the Seller Assisted Marketing Plan seller.
then Yaro may be a SAMP, who needs to register and disclose. At the very least, Yaro should get expert legal advice on this matter.
Now, let's turn to the new FTC Rule on Testimonials. On Yaro's pitch page, he states that he is going to show you:
The precise model I used to create several $100,000+ a year memberships, formulated into an easy-to-follow method I'll reveal to you - for FREE.
But, he then takes away this representation about earnings on Yaro's terms and conditions page, where he says:
"I do not guarantee any income or result whatsoever as a result of your participation in Blog Mastermind. I provide the tools and education, you are responsible for your results."
The problem here is that Yaro Starak probably has no idea about how much the typical consumer of his program earns, and so there is no safe harbor for the original earnings representation provided by the disclaimer.
I have chose Yaro Starak's program, and I could chose many others, precisely because it likely contains decent contain, worth the price, and is recommended by many seasoned marketers.
But, he is likely outside of compliance both the California SAMP Act, and the FTC Rule.
Is your internet marketing program in compliance? If not, what are you going to do about it?
Comments
This is extremely interesting. Especially part 2:
"(2) Represented that there is a market for the product, equipment, supplies, or services, or any product marketed by the user of the product, equipment, supplies, or services sold or leased or offered for sale or lease to the purchaser by the seller, or anything, be it tangible or intangible, made, produced, fabricated, grown, bred, modified, or developed by the purchaser using, in whole or in part, the product, supplies, equipment, or services which were sold or leased or offered for sale or lease to the purchaser by the Seller Assisted Marketing Plan seller."
I just read the Washington Specific information here:
http://www.dfi.wa.gov/sd/publications/business_opportunity/what_is_a_business_opportunity.htm
And is seems alarmingly clear that if the other States are similar that there are likely a lot of coaching programs violating business opportunity filing requirements and laws as you've pointed out.
I think most of us - including myself - have been under the impression that the seller of a business opportunity had to also provide the actual product or service that the buyer would end up selling.
But clearly that is NOT what this phrase is saying:
"or any product marketed by the user of the product, equipment, supplies, or services sold or leased or offered for sale or lease to the purchaser by the seller"
So I take that to mean that even if *I* find the product or service to sell as the buyer but am relying up a system or training bought from someone else that has a price-point above a certain dollar threshold - it doesn't matter if the seller of the business opportunity has any control over what I ultimately sell.
Amazing. Thank you for explaining this Michael. I'm sure this is going to lead to some interesting discussions.
Posted by: Paul Schlegel | October 20, 2009 3:46 PM